Are you aware that if you owe money to the IRS they can garnish your wages? What a scary prospect. Of course the IRS can do a lot more than garnish your wages; under Internal Revenue Code section 6331, the IRS can levy upon wages, bank accounts, social security payments, accounts receivables, insurance proceeds, real property, and, in some cases, a personal residence. And the IRS can get to your assets through you, your bank, your brokerage, your employer, etc.
Let’s take a closer look at the wage garnish process and discuss the appeal process if you are delinquent on your taxes.
The Wage Garnishment Process
The IRS has statutory authority to garnish your wages to seize property to satisfy a tax liability without taking you or your employer to court. That’s right; they just need to issue a Tax Levy, and your employer must comply with the garnish of wages (or they will be in a lot of trouble).
To begin this levy process, the IRS needs to inform you with a Notice of Intent to Levy at least 30 days before the levy is to take place. They can do this by either personally hand delivering the notice, sending it through certified mail, or leaving it with your employer.
How to Appeal a Wage Garnishment
As a taxpayer, you are entitled to one Collection Due Process hearing (CDP) with the Office of Appeals for each tax period (tax year) to which the levy applies. The 30 day period referenced above is important, as you will be given information (IRS Form 12153) that will allow you to request a hearing.
At this hearing, you may only appeal one of the following:
If you have paid all of your taxes owed prior to receiving the Notice of Intent to Levy
If the IRS sent the levy notice while you were in bankruptcy
If there is a procedural error in the assessment
If the Statue of Limitations expired before the levy was sent
If you want to discuss collection options
If you want to make a spousal defense: you need to apply and meet the qualifications of an innocent spouse
If you are not satisfied with the results from the CDP appeal hearing and believe you still have a case, you can contest the decision at the United States Tax Court or at a federal district court. You have 30 days to decide if you would like to appeal after receiving the CDP’s determination.
Another Way to Stop a Wage Garnish
You may be able to stop a levy against your wages if you submit an Offer In Compromise (OIC). Under this IRS program, you can settle any debt owed for less than the total amount through negotiations.
You will need to see if you qualify by checking out Form 656. Some of the qualifications include showing that you are incapable of paying the debt (Doubt of Collectability), demonstrate extenuating or special circumstances, or show that the tax liability is incorrect.
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